May 21, 2014

Lawsuit Launched Against Google Over AdSense Fraud

Consumer rights law firm Hagens Berman on Tuesday filed a national class-action lawsuit against Google, claiming that the tech giant "unlawfully denies payments to thousands of website owners and operators who place ads on their site sold through Google AdWords."

The lawsuit was filed in the US District Court for the Northern District of California and it alleged that Google abruptly canceled website owners' AdSense accounts, often without explanation shortly before payments were due. It also alleged that Google refused to pay for the ads that ran prior to the cancellation.

"This wrongful practice has sparked numerous bitter complaints from website owners across the Web, with some reporting losses reaching thousands of dollars a pop," Steve Berman, the attorney representing consumers and founding partner of Hagens Berman, said in a statement. "What we believe to be true from our research is that Google's practice is likely hurting thousands of website owners and operators who feel they have no way to fight a giant company like Google."

This lawsuit follows last month's allegations made by an anonymous blogger who claimed to be a former Google employee. He alleged that Google canceled AdSense accounts so as not to pay publishers.

In the post the anonymous blogger wrote: "I took part in what I (and many others) would consider theft of money from the publishers by Google, and from direct orders of management. There were many AdSense employees involved, and it spanned many years, and I hear it still is happening today except on a much wider scale. No one on the outside knows it, if they did, the FBI and possibly IRS would immediately launch an investigation, because what they are doing is so inherently illegal and they are flying completely under the radar."

Google has strongly denied the allegations, and in a statement posted on ReCode said: "This description of our AdSense policy enforcement process is a complete fiction. The color-coding and 'extreme quality control' programs the author describes don't exist. Our teams and automated systems work around the clock to stop bad actors and protect our publishers, advertisers and users."

However this week the drama was escalated to a class action lawsuit filed on behalf of Free Range Content, a California-based company that claims it had its AdSense account canceled to avoid receiving a payment.

There are notable problems already with this story, and it seems that all the facts might not add up.

Business Insider reported that "most people regard the 'Adsense leaker' as a fake'" yet also noted that "Google often behaves so mysteriously that many advertisers and publishers will actually welcome to suit: It may finally shed some light on exactly how and why Google kicks websites out of its vast, $60 billion a-year advertising system."

Google declined to comment about the lawsuit or allegations.

TechCrunch reported that these allegations are far reaching to say the least and stated "the whole thing smells fishy."

"Despite saying they were a Google employee, they didn't use langauge [sic] consistent with Google's internal lexicon. It purported that 'invalid clicks' were used by AdSense publishers' competitors to get their accounts cancelled for fraud, but Google has sophisticated algorithms to detect this kind of attack," the news site noted.

"Functionally, Google is believed to refund advertisers if it doesn't end up paying their money out to a publisher, so it couldn't earn money by the supposed scam laid out in the class action suit," TechCrunch added. "And killing off publishers with high lifetime values to Google just so it could get a one-month boost in its revenue is an unsustainable and thereby unwise strategy."

So why would Google dump those sites that are generating revenue? As Business Insider also reported, "Indeed, as Google merely takes a cut of ads placed on its system, it actually reduces Google's own revenue when it cancels publishers' accounts and reverses ad payments back to the advertisers."

Finally, while Google has not publicly responded to the class-action lawsuit, Matt Cutts, the executive in charge of Google's Web spam team, descried the claims made by the blogger to Cnet as a "conspiracy-laden fake, from the typos to wrong terminology to untrue policies to the lack of specific names of people."